AAII Sentiment Survey: Optimism Back Above Average

The percentage of individual investors expecting an increase in stock prices rebounded this week according to the latest AAII Sentiment Survey. Neutral sentiment declined while pessimism is slightly higher.

Bullish sentiment, expectations that stock prices will rise over the next six months, rebounded by 4.2 percentage points to 39.3%. Optimism is above its historical average of 38.5% for just the fifth time in 24 weeks.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, pulled back by 4.5 percentage points to 35.3%. Even with the decline, neutral sentiment is above its historical average of 31.0% for the fifth time in seven weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose 0.3 percentage points to 25.4%. Pessimism remains below its historical average of 30.5% for a third consecutive week.

At current levels, all three sentiment indicators are within their typical historical ranges, though neutral sentiment is very close to the top of its range.

While the rebound in stock prices is encouraging some individual investors, others have concerns about its sustainability. Many individual investors are monitoring trade negotiations. Also having an influence are Washington politics (including President Trump and Democratic control of the House of Representatives), corporate earnings, the Federal Reserve, valuations and concerns about the pace of economic growth.